Order 2020-4-2 Served: April 7, 2020 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 7th day of April, 2020 CONTINUATION OF CERTAIN AIR SERVICE Docket DOT-OST-2020-0037 Under Public Law 116-136 §§ 4005 and 4114(b) FINAL ORDER I. SUMMARY By this Order, the U.S. Department of Transportation (Department) is finalizing its tentative determinations, made in Order 2020-3-10 (Show Cause Order), with some modifications to address issues raised by commenting parties. This Final Order establishes the parameters for implementation of the authority granted to the Secretary of Transportation (Secretary) by Sections 4005 and 4114(b) of the Coronavirus Aid, Recovery, and Economic Security Act (the CARES Act). As detailed further below, the Order requires air carriers receiving financial assistance under the CARES Act to maintain minimum air services on a nationwide basis, with some exceptions. II. BACKGROUND On March 27, 2020, the President signed the CARES Act into law. Sections 4005 and 4114(b) of the CARES Act authorize the Secretary to require, “to the extent reasonable and practicable,” an air carrier receiving financial assistance under the act to maintain scheduled air transportation service as the Secretary deems necessary to ensure services to any point served by that air carrier before March 1, 2020 (Service Obligation). In the Show Cause Order, the Department proposed parameters for how it would implement the Service Obligation authorized by the CARES Act initially, including the direct air carriers and points that would be covered, the minimum service levels required, reporting requirements, and the duration of the service requirements. The Department invited comments on the proposal. The Department received 45 comments from air carriers,1 airports, communities, private businesses, and associations representing airports, airlines, and the pharmaceutical industry.2 Several commenters, including Airlines for America (A4A), Delta, United, Southwest, JetBlue, Alaska, and Hawaiian, generally supported the Show Cause Order, with requests for minor modifications. A4A stated that it “very much appreciate[s] the crucial flexibility that the Department included in the Order…”3 Southwest, JetBlue, Delta, United, and Alaska all supported these comments. Airports and their trade associations generally supported the proposal, but suggested changes to the minimum service levels, airport groupings, and the proposed reporting and enforcement procedures. Other air carriers, including Allegiant, Spirit, Frontier, Sun Country, and Ravn, and the National Air Carrier Association (NACA), objected to the Show Cause Order and proposed substantial modifications, particularly related to the Show Cause Order’s treatment of seasonal service and the minimum service obligations that would apply to covered carriers. All comments received can be accessed in the public docket at www.regulations.gov by searching the above-captioned docket number. The Department will address the comments received topically in the sections that follow. III. COVERED CARRIERS Passenger air carriers and all-cargo carriers are eligible for financial assistance under the CARES Act.4 In the Show Cause Order, the Department tentatively determined that the Service Obligation under Sections 4005 and 4114(b) would apply to a subset of air carriers under 49 U.S.C. § 40102, which is the definition cited in the CARES Act. The Department proposed that the Service Obligation would apply to direct air carriers accepting financial assistance under the CARES Act that hold certificates of public convenience and necessity for scheduled passenger air transportation pursuant to 49 U.S.C. §§ 41101 - 41102 or that hold a Commuter Air Carrier Authorization pursuant to 14 CFR Part 298 (covered carriers). The Department also tentatively determined that, because they operate largely on an on-demand basis, carriers with certificates of public convenience and necessity for charter operations and air taxi operators registered under 14 CFR Part 298 would be exempt from the Service Obligation under Sections 4005 and 4114(b). In the Show Cause Order, the Department also tentatively determined that all-cargo operators that hold certificates of public convenience and necessity to provide air transportation pursuant to 49 U.S.C. §§ 41101 and 41103 that accept financial assistance under the CARES Act would 1 Common names of carriers are used throughout this Order. 2 In the interest of a complete record, the Department is accepting all late-filed comments and objections as of the service date of this Order, notwithstanding whether they were accompanied by an appropriate motion for leave to file. 3 A4A at 3. 4 Public Law No. 116-36, §§ 4003(b)(1)-(2), and 4112(a)(1)-(2). 2 be subject to the Service Obligation under Sections 4005 and 4114(b), but that the Department would enforce that obligation differently. The Department did not receive any comments objecting to these definitions and therefore finalizes them without change.5 IV. COVERED POINTS In the Show Cause Order, the Department tentatively determined that the Service Obligation under Sections 4005 and 4114(b) would pertain to only U.S. points. Two groups representing pharmaceutical interests (the Association for Accessible Medicines, “AAM,” and the Pharmaceutical Research and Manufacturers of America, “PhRMA”) objected to this tentative determination, arguing that carriers receiving assistance under the CARES Act should be required to continue to serve international points in order to maintain the supply chain for pharmaceutical and other medical goods to the United States.6 A4A supported the exclusion of international points, noting a variety of practical barriers to resuming services under a Service Obligation. The Department continues to believe that exclusion of international points in the Service Obligation is warranted at this time. In addition to the current global Level 4 Health Advisory urging all U.S. citizens to avoid all international travel,7 service pulldowns in international markets are also being driven by foreign government-imposed restrictions on flights, prohibitions on the entry of certain categories of travelers, and/or crew quarantine requirements that make many services untenable from an operational perspective. These constraints notwithstanding, we note that U.S. carriers are maintaining international service wherever practical and as demand may warrant. This includes U.S. combination carriers initiating all-cargo operations in international markets where passenger service has been rendered unviable, as well as all-cargo carriers bolstering charter operations in international markets where there have been bottlenecks in international supply chains.8 Should circumstances change as the global response to the current public health emergency evolves, the Department is willing to reconsider the inclusion of international points in the 5 While reconciling the data used to determine the Covered Carriers, the Department has determined some additions and subtractions are necessary from Appendix B provided in the Show Cause Order. Carriers now included in the Appendix are Elite Airways LLC (2HQ); City Wings Inc dba Seaflight (1QQ); Friday Harbor Seaplanes (WST); Gem Air LLC (22Q); Grand Canyon Helicopters (GCH); Key Lime Air Corporation (38Q); Multi-Aero, Inc. d/b/a Air Choice One (3E); New England Airlines Inc. (NEW); Rectrix Aviation, Inc. (3DQ); Seaborne Virgin Islands, Inc. (SEB); Star Marianas Air Inc. (1SQ); Sun Air Express LLC dba Sun Air International (1RQ); Via Airlines d/b/a Charter Air Transport (1AQ). Peninsula Airways Inc. (KS) has now been removed from the Appendix. Appendices B and C are illustrative only. The definitions in the Order are controlling. In the event the Department has failed to identify a covered carrier or point in these Appendices, the definitions provided in the Order supersede the lists in the Appendices. 6 Association for Accessible Medicines at 1-2; PhRMA at 1-2. 7 See https://travel.state.gov/content/travel/en/traveladvisories/ea/travel-advisory-alert-global-level-4-health- advisory-issue.html (Accessed March 26, 2020). 8 See, for example, “New Delta cargo flights between U.S.-China help keep medical supply chain flying,” Delta Press Release, Mar. 30, 2020; and “Atlas Air Worldwide Provides Critical Support in the Fight Against Coronavirus,” Atlas Air Press Release, Apr. 3, 2020. 3 Service Obligation of covered carriers. If pharmaceutical or other interests encounter a critical supply chain issue, as recognized by the CARES Act, they may petition the Department at any time to exercise its authority. As part of that process, the Department would need to consider all implications for the Department’s international aviation policy and United States international obligations under various air service agreements with foreign partners. Any change to a covered carrier’s Service Obligation would only occur after notice and an opportunity to comment. The Show Cause Order also tentatively determined that, in cases where multiple airports serve the same point, covered carriers would not need to maintain service to all such airports, but would be able to consolidate operations at a single airport serving the point. A4A, the Port Authority of New York and New Jersey (Port Authority), Airports Council International-North America (ACI-NA) and the Association of Airport Executives (AAAE) commented on various aspects of this provision.9